Czech Republic Inflation

Czech Republic: Inflation moderates in March

April 7, 2011

In March, consumer prices rose 0.09% over the previous month, following a price rise of the same magnitude in February. The monthly rise reflected higher prices for clothing and footwear, as well as for transport, which were partially offset by lower prices for recreation and culture. Owing to the subdued March increase, annual headline inflation inched down from 1.8% in February to 1.7%, which was broadly in line with market expectations, but below the Central Bank's estimate that inflation would rise to 1.9%. At the current level, inflation remains below the Central Bank's target of 2% 1%. The Central Bank expects inflation to rise to 2.3% in the final quarter of this year before inching down to 2.2% in the fourth quarter of 2012.

At its first meeting of the new year, held on 1 February, the Czech National Bank (CNB) unanimously decided to increase the two-week repo rate by 25 basis points to 0.75%, and the Lombard rate by 50 basis points to 1.50%; the discount rate was, however, left unchanged at 0.05%.